January 13, 2011 (Chinavestor) Chinese stocks rose for the third day in a row on Thursday on earnings optimism. Investors bought large cap stocks assuming profitability of industry leaders will be strong during the upcoming earnings season. All told, the Shanghai Composite Index (SHA:000001) rose 6.3 points or 0.3% while the Hang Seng Index (INDEXHANGSENG:.HSI) advanced 113.4 points or 0.5%.
China Petroleum & Chemical Corporation (SHA:600028) known as Sinopec, Asia's largest refiner by volume, advanced 2.0% while Petrochina Co. Ltd. (SHA:601857), China's largest oil producer, rose 1.4% in Shanghai. Both companies outperformed the market in Hong Kong as well. NYSE cross-listed China Unicom (HKG:0762), the second largest Chinese mobile operator, was the best performing component of the Hang Seng Index (INDEXHANGSENG:HSI) thanks to a 2.5% surge. Industrial and Commercial Bank of China (HKG:1398), the world largest financial institution, advanced 1.5% while China Construction Bank (HKG:0939), one of the four largest banks of the country, rose 1.4%. This bodes well for financial heavy weight iShares FTSE/Xinhua China 25 Index (NYSE:FXI), among Chinese ETFs.
Looking at components of key Chinese ETFs this morning, most components of the iShares FTSE/Xinhua China 25 Index (NYSE:FXI) rose in Hong Kong with large cap energy and financial stocks taking the lead. But weakness of the telecom sector took a toll on the market in Hong Kong dashing high hopes for China Telecom (NYSE:CHA) and China Mobile (NYSE:CHL) for the day.
Small caps were mixed in Asia on Thursday, as components of the Guggenheim Small Cap China ETF (NYSE:HAO) testify. There is no direction among small caps this morning.
If components of the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as proxy for ADR and ETF trading, outlook is best for oil major Petrochina Co. Ltd. (NYSE:PTR) and China Petroleum & Chemical Corporation (NYSE:SNP) from the energy sector. China Unicom (NYSE:CHU) was the best component of the Hang Seng Index (INDEXHANGSENG:.HSI) on Thursday, suggesting the stock will gep up on the NYSE this morning as well. Financial and energy heavy weight iShares FTSE/Xinhua China 25 Index (NYSE:FXI) is looking good ahead the opening bell as well.